Many employers are interested in offering financial wellness programs to their employees, but there appears to be limited consensus on the approach, according to new research from the Employee Benefit Research Institute (EBRI).
Last spring, EBRI began exploring employers’ interest in offering financial wellness initiatives with a series of focus groups, and in July 2018 conducted a survey with 250 large employers. Among the areas examined were how employers are defining financial well-being, what they are doing (or not doing) in this area, why it is on their agendas, and how they define success.
In its report on the research, “EBRI’s 2018 Financial Wellbeing Employer Survey,” EBRI explains that, based on the focus group discussions, financial wellness programs were about more than just increasing workers’ productivity. It notes, for example, that while some employers were concerned about absenteeism due to financial stress, many were also generally interested in promoting workplace satisfaction.
To that end, employers identified with the “notion” that it’s important for employees to balance current and future financial needs and that future financial security should not come at the expense of financial stability today.
When asked to list the top three reasons for offering financial wellness initiatives, the top answers by employer respondents were:
- Improved overall worker satisfaction (54%)
- Reduced employee financial stress (48%)
- Improved employee retention (47%)
- Improved employee use of existing benefits (34%)
- Increased employee productivity (32%)
As for considerations in whether to offer a program, cost to employer (50%), interest among employees (46%) and value proposition to employees (40%) ranked as the top three that employers stated they use. EBRI notes that value proposition to the employer ranked fourth, with 27% citing that as a top consideration.
Meanwhile, approaches to financial wellness programs vary widely, according to survey respondents.
EBRI found that the most common financial wellness benefits offered were for employee discount programs such as for cell phones, travel and entertainment (72%); tuition reimbursement (69%); and financial planning education, seminars and webinars (60%). In contrast, only about 1 in 10 survey respondents offer emergency savings vehicles or accounts, debt management services or student loan repayment subsidies or consolidation/refinancing services.
However, more than a quarter (28%) said they offer emergency funds or employee hardship assistance, but these vary widely, including case-by-case programs (14%), natural disaster funds (11%), hardship loans from DC plans (11%) and funds from voluntary payroll deductions (11%).
Not surprisingly, the largest firms were found to be the most likely to offer financial wellness programs. Among companies that were at least interested in providing employees with financial wellness initiatives, 54% were offering them to their employees, 12% were actively implementing a program and 34% were interested. Meanwhile, 75% of firms with 10,000 or more employees offered financial wellness initiatives at the time, compared with nearly half (49%) of smaller firms.
Opportunities for Enhancements
And while financial well-being was of great interest to employers, the programs were typically in their initial stages. Many had engaged only in pilot programs for select groups of workers, making it potentially difficult to scale for broader rollout, the report explains. In fact, 38% of firms considered their initiatives to be in the pilot phase, while another 34% described their efforts as periodic campaigns or ad hoc programs.
Employers also reportedly encounter a number of issues in offering financial wellness initiatives, according to EBRI. These included complexity of programs (44%), lack of staff resources (43%), lack of interest among employees (43%) and challenges in making an effective business case to management to justify the cost (42%).
“They face many challenges in implementing these programs, grapple with how to measure the success of the programs, and ultimately grapple with how to make a successful business case for broader implementation of these initiatives,” notes Lori Lucas, president and CEO of EBRI, and author of the study.
Meanwhile, measures used to evaluate the success of financial wellness initiatives range from specific (improved employee retention) to quite broad (improved overall worker satisfaction). However, EBRI notes that, with few using metrics or assessments, it may be difficult for employers to accurately evaluate their initiatives.
Nevertheless, employers are interested in initiatives to improve the financial well-being of their workers and many believe that the majority of their employees would likely make use of these benefits, the report concludes.